ATCO Ltd.
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TSX : ACO.Y
TSX : ACO.X

ATCO Ltd.

October 25, 2007 08:11 ET

ATCO Ltd. Reports Increased Third Quarter Earnings

CALGARY, ALBERTA--(Marketwire - Oct. 25, 2007) - ATCO Ltd. reported earnings of $50.1 million ($0.86 per share) for the three months ended September 30, 2007, compared to earnings of $44.4 million ($0.75 per share) for the same three months of 2006. Earnings for the nine months ended September 30, 2007 were $187.0 million ($3.21 per share) compared to earnings of $151.0 million ($2.53 per share) for the same nine months in 2006.



Financial Summary For the Three For the Nine
Months Ended Months Ended
September 30 September 30
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2007 2006 2007 2006
---- ---- ---- ----
($ Millions except per share data)
(unaudited)
Earnings 50.1 44.4 187.0 151.0
Earnings per Class I and II share 0.86 0.75 3.21 2.53
Revenues 605.1 663.4 2,126.4 2,051.5
Funds generated by operations (1) 185.0 178.1 639.4 566.1

(1) This measure is cash generated from operations before changes in
non-cash working capital and is not defined by Generally Accepted
Accounting Principles. This measure may not be comparable to similar
measures used by other companies.


Earnings for the three months ended September 30, 2007, increased primarily due to:

- increased business activity in ATCO Structures;

- an income tax expense that was recorded by Alberta Power (2000) reduced earnings by $2.2 million in the third quarter of 2006. This adjustment, which reduced earnings by $6.4 million in 2006, of which $4.2 million was recorded in the second quarter of 2006, pertained to a Canada Revenue Agency assessment on the taxation of proceeds received from the sale of the H.R. Milner generating plan in 2001 ("H.R. Milner Income Tax Reassessment");

- reduced tax expense resulting from lower future corporate tax rates in ATCO Power's U.K. operations; and

- improved performance in ATCO Power's and ATCO Resources' Alberta generating plants.

This increase was partially offset by:

- the timing and demand of natural gas storage capacity sold, lower storage fees and lower volumes for natural gas liquids ("NGL") in ATCO Midstream; and

- higher operating and maintenance expenses and depreciation expenses in ATCO Gas due to customer growth and increased capital expenditures.

Earnings for the nine months ended September 30, 2007, increased primarily due to:

- increased business activity in ATCO Structures;

- $11.5 million adjustment relating to the 2007 change in the taxation of preferred share dividends. In the second quarter of 2007, the federal government amended legislation on the taxation of preferred share dividends paid. This change, which was retroactive to 2003, resulted in a reduction in income tax expense that was recorded in the second quarter of 2007;

- improved merchant performance, increased availability, higher exchange rates on conversion of earnings to Canadian dollars and reduced tax resulting from lower future corporate tax rates in ATCO Power's U.K. operations;

- colder temperatures, customer growth and higher sales per customer in ATCO Gas; and

- H.R. Milner Income Tax Reassessment in 2006.

This increase was partially offset by:

- $11.7 million after tax gain in 2006 on the sale of land located in downtown Calgary; and

- $9.3 million adjustment in 2006 to reflect decreased federal and provincial taxes and rates.

Revenues for the three months ended September 30, 2007, decreased primarily due to:

- impact of the ATCO Electric 2007/2008 General Tariff Application decision received from the Alberta Energy and Utilities Board ("AEUB") in the third quarter of 2007. The decision directed ATCO Electric to change its income tax methodology for federal purposes whereby, effective January 1, 2007, ATCO Electric no longer recognizes future income taxes. ("ATCO Electric Decision");

- lower natural gas fuel purchases recovered on a "no-margin" basis in ATCO Power's U.K. operations; and

- decreased business activity in ATCO Frontec's operations.

This decrease was partially offset by:

- increased business activity in ATCO Structures;

- impact of finalization of customer rates in the ATCO Gas 2005, 2006 and 2007 General Rate Application confirmed by the AEUB in August 2007;

- colder temperatures and customer growth in ATCO Gas; and

- improved merchant performance in ATCO Power's and ATCO Resources' Alberta generating plants.

Revenues for the nine months ended September 30, 2007, increased primarily due to:

- increased business activity in ATCO Structures;

- colder temperatures, customer growth and higher sales per customer in ATCO Gas; and

- the timing and demand of natural gas storage capacity sold and higher storage fees in ATCO Midstream.

This increase was partially offset by:

- impact of the ATCO Electric Decision; and

- lower prices and volumes of natural gas processed for NGL extraction in ATCO Midstream.

Funds generated by operations for the three months ended September 30, 2007, increased primarily due to increased cash flow after removal of non-cash items.

This increase was partially offset by decreased deferred availability incentives in Alberta Power (2000).

Funds generated by operations for the nine months ended September 30, 2007, increased primarily due to increased earnings.

This increase was partially offset by decreased deferred availability incentives in Alberta Power (2000).

Other Recent Highlights include:

- ATCO Frontec entered into a limited partnership with the Fort McKay First Nation to construct, own and operate a new 500-room lodge in the Alberta oilsands region north of Fort McMurray, Alberta.

- ATCO Midstream Ltd. entered into an agreement to purchase a 50% interest in a joint venture which operates a 2.5 million cubic feet per day natural gas processing plant near the town of Kisbey, Saskatchewan.

- A record number of ATCO companies were honoured for safety. Four ATCO Group companies were honoured as "Best Safety Performers" in the province by Alberta's Occupational Health and Safety Council.

- ATCO Gas and its partners officially opened a new solar powered community in Okotoks in September. Incorporating the most advanced thermal technology, the Drake Landing project supplies 52 homes with 90 percent of their yearly space heating needs.

ATCO Ltd.'s consolidated financial statements, and management's discussion and analysis of financial condition and results of operations for the three and nine months ended September 30, 2007, will be available on ATCO Ltd.'s website (www.atco.com) or via SEDAR (www.sedar.com) or can be requested from the Corporation.

ATCO Ltd., an Alberta based worldwide organization of companies with assets of approximately $7.8 billion and more than 7,000 employees, is comprised of three main business divisions: Power Generation; Utilities (natural gas and electricity transmission and distribution) and Global Enterprises, with companies active in industrial manufacturing, technology, logistics and energy services.

Forward-Looking Information:

Certain statements contained in this news release may constitute forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "plan", "expect", "may", "will", "intend", "should", and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Corporation believes that the expectations reflected in the forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.

The Corporation's actual results could differ materially from those anticipated in these forward-looking statements as a result of regulatory decisions, competitive factors in the industries in which the Corporation operates, prevailing economic conditions, and other factors, many of which are beyond the control of the Corporation.

The forward-looking statements contained in this news release represent the Corporations' expectations as of the date hereof, and are subject to change after such date. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

Contact Information

  • ATCO Ltd.
    K.M. (Karen) Watson
    Senior Vice President & Chief Financial Officer
    (403) 292-7502
    Website: www.atco.com